MEV Infrastructure

Searchers are specialized bots or algorithms that scan the mempool and simulate transactions to identify profitable MEV opportunities. They construct transaction bundles containing their target transactions and any necessary back-running or front-running operations, which they then submit to builders or validators for inclusion in a block.

• Primary Role: Opportunity discovery and bundle creation.
• Examples: Arbitrage bots, liquidators, NFT snipers.
• Tools: Flashbots' SUAVE, private transaction pools.

Block builders are specialized nodes that compete to construct the most profitable and valid block from pending transactions and searcher bundles. They use sophisticated algorithms to optimize block content for maximum extractable value and fee revenue before proposing it to a validator.

• Primary Role: Block construction and optimization.
• Key Concept: Proposer-Builder Separation (PBS) decouples building from proposing.
• Output: A complete block header and body, often with a fee bid for the proposer.

Relays are trust-minimized intermediaries that sit between builders and validators (proposers). They receive built blocks from many builders, verify their validity, and present the most profitable valid block to the proposer. This prevents proposers from stealing the MEV strategies contained within the blocks.

• Primary Role: Fair and secure block auctioneer.
• Function: Validates blocks, runs auctions, ensures censorship resistance.
• Examples: Flashbots Relay, bloXroute, Agnostic Relay.

In Proof-of-Stake networks like Ethereum, the validator selected to propose the next block is the proposer. Their role is to select the most profitable block header presented by relays (in a PBS model) or to build it themselves. They are the final entity that signs and publishes the block to the network, collecting the associated fees and MEV rewards.

• Primary Role: Block proposal and consensus.
• Incentive: Maximizes profit by choosing the block with the highest bid.
• Key Protocol: Ethereum's Proposer-Builder Separation (PBS) formalizes this role.

The public mempool is a network-wide pool of pending transactions visible to all nodes. For MEV, private transaction channels (like Flashbots Protect or Taichi Network) are critical. They allow searchers and users to submit transactions directly to builders without exposing their intent to the public, preventing front-running and sandwich attacks.

• Public Mempool: Source of transaction data and opportunistic MEV.
• Private Order Flow: Protects user transactions and enables complex MEV strategies.
• Impact: Reduces negative, predatory MEV for everyday users.

SUAVE is a decentralized, chain-agnostic mempool and block builder network proposed by Flashbots. It aims to decentralize the MEV supply chain by creating a neutral marketplace for preference expression and block building.

• Core Idea: Separates the roles of expressing transaction preferences (users/searchers) from execution (builders).
• Goal: Increase competition, reduce centralization risks in building, and improve transaction privacy.
• Future Vision: A potential new blockchain dedicated to optimizing block building across multiple chains.

Searchers are specialized entities (often automated bots) that scan the mempool and state of a blockchain to identify profitable MEV opportunities. They construct and submit transaction bundles to validators or builders. Their strategies include arbitrage, liquidations, and sandwich attacks. Examples include sophisticated trading firms and open-source bots like the Flashbots searcher.

Block builders are specialized nodes that construct complete execution payloads (blocks) by selecting and ordering transactions from the mempool and private order flows (like Flashbots Protect). They compete to create the most valuable block for a validator, optimizing for block reward and priority fees. This role is central to proposer-builder separation (PBS) architectures.

A relay is a trusted intermediary that sits between block builders and validators (proposers). Its primary functions are:

• Receiving blocks from multiple builders.
• Validating block contents and proof of execution.
• Holding a builder auction and selecting the most profitable, valid block.
• Forwarding the winning block header to the validator. Relays like the Flashbots Relay and BloXroute help prevent censorship and ensure validator neutrality.

Order Flow Auctions are a market mechanism designed to democratize access to MEV. Instead of a wallet or dApp submitting a transaction directly to the public mempool, they auction the right to execute it. Searchers bid for the right to include the transaction in a bundle, with the user or their wallet receiving a portion of the winning bid as a rebate. This aims to return MEV value to users.

Searchers are specialized bots or agents that scan the mempool for profitable MEV opportunities, such as arbitrage or liquidations. They construct and submit transaction bundles to validators or builders to capture this value. Their strategies include:

• DEX Arbitrage: Exploiting price differences across decentralized exchanges.
• Liquidation: Triggering undercollateralized loan liquidations for a reward.
• Sandwich Trading: Profiting by placing orders before and after a large user transaction.

Block builders are specialized nodes that construct complete execution payloads (blocks) by selecting and ordering transactions from the mempool and searcher bundles. Post-EIP-1559 and with proposer-builder separation (PBS), they compete to create the most valuable block for validators. Their role is critical for MEV extraction efficiency and network resource optimization. Builders often aggregate bundles from multiple searchers to maximize the total value of the block.

A relay is a trusted intermediary that sits between block builders and validators (proposers) in a PBS design. Its primary functions are:

• Censorship Resistance: Receiving and holding builder bids without viewing their contents.
• Bid Guarantee: Ensuring the validator is paid and the builder's block is delivered as promised.
• Data Availability: Providing cryptographic commitments to the block header and body. Relays are a critical trust layer, preventing builders from withholding blocks after winning an auction.

MEV-Boost is middleware that enables Ethereum validators to outsource block construction via proposer-builder separation (PBS). It allows validators to connect to multiple external relays, which solicit block bids from builders. The validator simply selects the highest-paying header. This design:

• Democratizes MEV Revenue: Allows solo stakers to access sophisticated block building.
• Reduces Centralization: Prevents integrated validator-builders from dominating.
• Increases Chain Efficiency: Optimizes block space for higher validator rewards.

This refers to protocols that redistribute extracted MEV back to users or other network participants. Key mechanisms include:

• Transaction Ordering Auctions: Protocols like Cow Swap use batch auctions to internalize MEV, returning it to traders as better prices.
• Proposer Payment Sharing: Validators can share a portion of their MEV rewards with their stakers or delegators.
• MEV Burn: Proposals exist to burn a portion of MEV revenue, making it a network-wide public good similar to EIP-1559's base fee burn.

A reorganization (reorg) attack where a validator or builder intentionally creates a competing chain branch to capture MEV that was revealed in the canonical chain. This undermines chain finality and user experience. Defenses include:

• Proposer-Builder Separation (PBS) to insulate the proposer.
• Enshrined PBS and crLists to limit reorg depth.
• Economic penalties (slashing) for malicious reorgs.

A prevalent frontrunning attack where a searcher exploits predictable DEX trades. The attacker:

1. Front-runs a victim's large buy order, driving the price up.
2. Lets the victim's order execute at the higher price.
3. Back-runs by selling the asset, profiting from the inflated price. This directly harms end-users through worse execution prices (slippage) and increased gas costs. Privacy solutions like encrypted mempools aim to mitigate this.

MEV-Boost relays are trusted intermediaries that receive blocks from builders and forward them to validators. They must be trusted to:

• Not censor transactions or blocks.
• Deliver blocks on time and in full.
• Not steal the validator's block reward. A malicious or compromised relay can cause significant harm. This creates a security dependency on a small set of relay operators, prompting research into trust-minimized or permissionless relay designs.

Block builders can form cartels to:

• Collude on bids, reducing auction competition and MEV passed to validators.
• Exclude certain searchers or transactions.
• Share order flow and strategies internally, centralizing information and profit. This reduces the economic efficiency of the MEV supply chain and can lead to a closed ecosystem dominated by a few players, similar to traditional finance.

MEV extraction activities, particularly frontrunning, may attract regulatory scrutiny. Key concerns include:

• Being classified as market manipulation (e.g., spoofing, layering).
• Insider trading if searchers exploit non-public information from private order flow.
• Consumer protection issues due to user harm from sandwich attacks. These risks could lead to legal action against infrastructure providers or demands for KYC/AML on searchers and builders, impacting permissionless access.